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Arbitral Award Cannot Be Modified By Executing Court On The Basis Of Just A Memo: Karnataka High Court

Parina Katyal
10 Jun 2022 2:50 AM GMT
Arbitral Award Cannot Be Modified By Executing Court On The Basis Of Just A Memo: Karnataka High Court
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The Karnataka High Court has ruled that in the absence of an application filed under Section 33 of the Arbitration and Conciliation Act, 1996 (A&C Act) for correction of typographical errors in the arbitral award, the Court cannot pass an order modifying and correcting the arbitral award on the basis of a Memo filed before it by a party.

The Single Bench of Justice E.S. Indiresh held that after the lapse of 30 days from the passing of the arbitral award, no application for rectification of typographical mistakes under Section 33 of the A&C Act can be entertained.

The petitioner Abhiram Infra Projects Private Limited entered into an agreement with the Karnataka Slum Development Board for some construction work. After some disputes arose between the parties under the agreement, the petitioner invoked the Arbitration Clause. The Sole Arbitrator passed an award in favour of the petitioner and rejected the counter claims made by the respondent Commissioner of Karnataka Slum Development Board.

The petitioner filed an Execution Petition before the trial Court for execution of the arbitral award. The respondent/judgment debtor filed a Memo before the trial Court. The trial Court allowed the said Memo and modified the arbitral award. Against this order of the trail Court, the petitioner filed a writ petition before the Karnataka High Court.

The petitioner/ award holder Abhiram Infra Projects submitted before the Karnataka High Court that an Executing Court has no jurisdiction to correct the award passed by an Arbitrator.

The petitioner averred that neither the respondent nor the petitioner filed an application under Section 33 of the A&C Act for correction of typographical mistakes, and therefore the Executing Court/ trial Court could not modify the arbitral award.

Section 33(1) of the A&C Act provides that a party may, within thirty days from the receipt of the arbitral award, and with a notice to the other party, request the Arbitral Tribunal to correct any computational, clerical or typographical errors or any other errors of a similar nature occurring in the award. Also, if so agreed to by the parties, a party may, with a notice to the other party, request the Arbitral Tribunal to give an interpretation on a specific point or part of the arbitral award.

Section 33(2) provides that if the arbitral tribunal considers the said request justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request, and the interpretation given shall form a part of the arbitral award.

The Court noted that under Section 33 of the A&C Act, an application for correction and interpretation of the arbitral award has to be made within 30 days from the date of receipt of the arbitral award by the parties. The Court added that any correction in the arbitral award can be made only after providing an opportunity to both the parties.

The Court observed that no such application under Section 33 of the A&C Act had been filed before the Executing Court, and that the respondent had filed a Memo before the Executing Court seeking clarification of the award.

The Court noted that the thirty days' time period for filing an application under Section 33 before the Arbitral Tribunal had elapsed. Therefore, the Court observed that the Executing Court had allowed the Memo filed by the respondent/judgment debtor and had passed the order modifying the arbitral award by exercising jurisdiction under Section 36(1) and 36(2) of the A&C Act.

The Court held that the said order passed by the Executing Court was impermissible in law since no application had been filed by the respondent/judgment debtor, before the Arbitral Tribunal or before the Execution Court, seeking correction of the typographical mistakes.

The Court observed that the Delhi High Court in the case of S.P.S. Rana versus MTNL and Ors. (2010), had ruled that unless an application or petition under Section 33(1) of the A&C Act is filed within 30 days of the passing of the arbitral award, the mandate of the Arbitral Tribunal is terminated after the passing of the award. The Delhi High Court had held that once the mandate of the Arbitral Tribunal terminates, it is not possible to file an application or petition under Section 33 of the A&C Act.

Thus, the Court held that after the lapse of 30 days from the passing of the arbitral award, no application for rectification of typographical mistakes under Section 33 of the A&C Act can be entertained.

Therefore, the Court ruled that in the absence of an application filed by the respondent under Section 33, the trial Court should not have passed an order modifying and correcting the arbitral award.

Thus, the Court allowed the writ petition and set aside the order of the trial Court.

Case Title: M/s Abhiram Infra Projects Private Limited versus The Commissioner, Karnataka Slum Development Board

Citation : 2022 LiveLaw (Kar) 198

Dated: 31.03.2022 (Karnataka High Court)

Counsel for the Petitioner: Mr. Samaksh Sood, Advocate for Sr Sundara Raman M V, Advocate

Click Here To Read/Download Order

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